In eukaryotes, extracellular molecules interact with cell surface receptors to alter the concentration of intracellular second messengers. These second messengers can ultimately promote cell proliferation and cytodifferentiation. We have now identified two intracellular molecules, cAMP and IP3, which in Dictyostelium regulate the expression of specific gene families during development. It is suggested that these molecules affect the activity of the cAMP-dependent protein kinase, the Ca++/calmodulin-dependent protein kinase and protein kinase C. Other components of the transmembrane signalling system have been partially characterized. GTP-binding, regulatory proteins mediate the action of some ligand activated receptors. We have begun a molecular genetic analysis of the signal transduction system in Dictyostelium. Genes have been isolated which encode a cell surface receptor and a GTP-binding protein. A single gene for the receptor is present in the genome. Interestingly, multiple mRNA forms are differentially expressed during development. The latter protein is encoded by two different genes. Data suggest that the protein is involved in intracellular communication and membrane associated functions.